BRASILIA, May 23 (Reuters) - Five grain trading houses, including Cargill Inc and Bunge Ltd, and dozens of farmers were fined a total of 105.7 million reais ($29 million) for activities connected to illegal deforestation, Brazilian authorities announced on Wednesday.

The five trading firms were fined 24.6 million reais and the government claims they bought nearly 3,000 tonnes of grain produced in areas off limits to farming under environmental rules, according to a statement from environmental watchdog Ibama. They include ABC Industria e Comercio SA, JJ Samar Agronegocios Eireli, and Uniggel Protecao de Plantas Ltda in addition to Cargill and Bunge.

Cargill and Bunge did not immediately respond to requests for comment, while the other traders could not be reached.

The fines are part of "Operation Soy Sauce" carried out since April by Ibama and federal prosecutors in the Matopiba region - comprising Maranhao, Tocantins, Piaui and Bahia states - in Brazil's Cerrado savannah.

The Cerrado is one of the fastest growing soy regions thanks to cheap and abundant virgin land subject to far weaker deforestation rules than those applied to the Amazon rainforest.

"Illegal Cerrado deforestation is advancing much faster in Matopiba than in other regions of the biome. This requires stepping up control strategies to deter every illegal link in the supply chain," said Renê Luiz de Oliveira, the head of environmental enforcement at Ibama, in the statement.

The operation focused on areas that had already been illegally deforested and had been embargoed by Ibama to allow native vegetation to regrow.

Dozens of farmers were fined for producing grains in these areas, suppressing the regrowth of the native vegetation or otherwise seeking to commercialize products originating in the embargoed areas.

Trading firms had purchased grains under advanced purchase agreements that in some cases financed the illegal farming to be carried out, Ibama said.

The statement said that public prosecutors plan to take legal action beyond the fines to ensure the offenders repair all environmental damage. ($1 = 3.6475 reais) (Reporting by Jake Spring; Editing by Lisa Shumaker)